This week I did some research on lending Bitcoins to earn interest.As you can see on my BTC wallet as of April 1, I have four different sites I have Bitcoins invested in, all of which are Bitcoin gambling sites.I want to add more places that I have invested in on this list of investments and Bitcoin lending seems like an obvious opportunity.On the Make Bitcoins page I mentioned Bitbond as a way to lend Bitcoins, and sure you can lend Bitcoins there and earn interest.However, it is more like a payday loan (from what I can tell) in that you are lending to someone with essentially no collateral.The interest rates are currently higher at Bitbond than on Poloniex.However, at Poloniex (in my opinion) it is EXTREMELY safe compared to Bitbond.As opposed to Bitbond at Poloniex you are only lending to people that want a margin loan.From my understanding of their trading platform it is impossible for the person borrowing from you to pull their Bitcoins (or alt coins out) until they have closed out the trade and paid back any money they are borrowing (done automatically with the platform of course).

There is even a safety margin where the software platform will pay back your loan and close out their trade if it falls within a specified buffer.The only real risk making Bitcoins lending at Poloniex from what I can tell, is that you are giving the site control of your Bitcoins.Just like Bitcoin Gambling Investing the site has 100% control of your Bitcoins.So if the site runs away or gets hacked then you could lose everything.I believe this is one the of current cold wallets used by Poloniex (as of writing this article) – 12cgpFdJViXbwHbhrA3TuW1EGnL25Zqc3P.Well over a Billion USD of Bitcoins has moved through the wallet to date.Just to re-cap the difference between lending at Bitbond versus Poloniex: So all loans earn interest on a daily interest rate and the length of the loans start at a minimum of two days but can go on for much longer.Interest rates are decided as per supply and demand, much like the price of Bitcoin.As of this week I have been lending about $2,000 worth of Bitcoins and been getting around 0.05% per day (after the site takes the 15% commission on earned interest) which equates to approximately 20% per year if the Bitcoins are always being borrowed by someone.

I have seen on reddit that people at different stages were getting much higher interest rates and other times much lower.It really depends on whether people want to borrow Bitcoins and margin trade.bitcoin gold pendantSo after two days your Bitcoins can be automatically lent out again at the same rate if you want to make it automatic (to do this you simply leave the auto-renew button on next to your active loan).best litecoin gpu 2014However, if the market changes and people no longer want to pay such a high fee to borrow Bitcoins, then your open trade to lend Bitcoins will sit there unfilled.bitcoin chart phThese unfilled loan offers can sit for potentially long periods of time and not make any interest.bitcoin sdr

This seems like a very real risk as you can see a lot more people are offering loans than requesting them as of today: I am going to invest some of my Bitcoins in Poloniex month on month and will report on how it goes in my monthly profit reports.litecoin hash poolMy initial guess it that I will likely make 1%-1.5% interest on average every month.bitcoin mining bay areaThere is also a daily withdraw limit of $2,000 for unverified accounts that you need to consider, and even if you are verified it only gets to a maximum of $25,000 a day.My unverified account is shown below: For your reference I have no affiliate deal with Poloniex and I have no connections with them.I would have preferred to come to the conclusion that Bitbond was the better option as it does have a great affiliate program; however, I believe Poloniex seems like the logical choice for me.

Time will tell and I will be sure to share the experience 🙂 Check out our list here of Bitcoin Lending Sites._ Here's how it works: Anybody can ask a question Anybody can answer The best answers are voted up and rise to the top up vote 7 down vote favorite To the best of my knowledge, there's no bank lending in bitcoins, yet, which surprises me.Now that Bitcoin has stabilized to circa USD $100, I think it could be reasonable for an institution to start lending in this currency.By using Bitcoins instead of a national currency, the number of potential lenders goes way up than the number of banks in most countries, and the interest rates could potentially be way lower.I thought of a way to make it even less risky for a potential lender to someone they don't know in a remote country: they could ask the potential client to ask for a loan in their national currency to a big, recognized bank.The bank would do the job of assessing the client's capability of payment, do the background checking, etc. and lend (in national currency) the amount they believe the client is capable of paying off, in the selected time period.

This amount would be transferred (via the traditional banking system) to the Bitcoin bank, and the documents for the loan would be scanned and faxed/e-mailed as well (with validated-transaltion attached, of course).The Bitcoin bank could then take the risk-assessment of the local bank at face-value, return aprox.95% of the amount transferred in the very same national currency to the client so it can pay the loan to the bank almost immediately (thus paying a very small amount in interest to the local bank) and then loan 90% of the original amount but in Bitcoins - at hopefully a lower interest rate.Of course, the difference in the amounts plus the interest would be the profit.In effect, grabbing the money from a recognized, traditional institution would be a way of saying "hey, look, other guys think I'm worthy of a credit up to aprox.this amount for this time-period".I for one would be happy to give it a try, taking a loan on Bitcoins!Could this be feasible?banks loans up vote 1 down vote There is BTCJam, and I heard of at least one more company doing the same thing.

However, there is a HUGE problem with BTC lending - it is very fraud prone.I exchanged emails with their support and got this interesting factoid: We have a repayment rate of 76.11% That means about a quarter of their loans don't get repaid.BTCJam does not appear to pursue defaulting borrowers either, meaning that if you happen to lend your money to a scammer, your money is gone.They claim to have the person's social network status, paypal history, phone verification and all that stuff, but they do nothing with that information.So while BTC lending is easy to do, enforcing repayment is nigh-impossible in such systems that are careless about what they do.up vote 2 down vote My co-founder and I just started a Bitbond.net where we connect borrowers and lenders and offer an online wallet.Our goal is to make banks obsolete by such a service.You can borrow Bitcoins by issuing a Bitbond.Before that, we perfom a credit rating to assess the creditworthiness of the issuer.

We also do an identity check so if a borrower is late on his or her payments this can hurt their credit score.The good thing about it is that by connecting borrowers and lenders directly you match the maturities of bith sides.One big problem with banks is that they give out long term loans and refinance them with very short term money, i.e.their client's deposits or overnight loans from other banks.Since Bitcoin wants to be a better and more stable currency we believe that banking as such also needs to improve.That is why we built Bitbond.net up vote 1 down vote where people can lend Bitcoins to friends they have on Facebook.up vote 1 down vote A bit of a shameless plug: we just launched BitLendingClub.It's slightly different from BTCJam in that we let the lenders determine what interest rate they're willing to fund a loan at and it's done via a dutch-auction style lending process.up vote 0 down vote Bitcoin lending would be done as in any bank lending - the bank opens a bit coin checking account for you in the amount of the loan.

You pay back the loan and interest by using the funds other people have borroed from other bitcoin banks.As long as more & more banks make more & more loans its ok.As in any banking the banks only need a fraction of the bitcoins on hand to cover the loans made.This also gets rid of the bit coin deflation problem because the banks are inflating the bitcoihns by making all these bitcoin checking accounts.The big wall street bank could jump in by seting up bitcoin debet cards and bitcoin credits cards.Paypal could setup a system to support bitcoins.Once bitcoins get going you could have specilized version of bit coins.For example you could have a type of bitcoins the mostly are used for pork bellies.Or say a type of bitcoins that tend to only be used for realestate.That way the exchange between these types of bitcoins would soffen any bubbles that may appear.There may be 100s of different types of bitcoins.To make a transaction the user would use plastic that would altomaticly use the correct bitcoin type for the transaction and adjust the verious accounts of the user.

The user would be protected from bubbles by the fact that only a few of the accounts would be effected by bubbles at any one time.So it a housing bubble broke you might find it hard to get a housingbitcoin loan but you still could get a transportationbitcoin loan to build a plane.We will therefore never have a problem like we had in 2008 again.up vote down vote I am not sure lending is a good idea for bitcoin, or at least not if the amount to be paid back was to be paid in bitcoins.Many of the problems with the current banking system of how "the small people" get into trouble is due to lending and the very immoral interest system, that also increase to a higher % depending on how little funds you have available.Interest would be an even bigger problem in a currency with a fixed amount.An example would be: Person A want to borrow 10.5 million bitcoins .AND person B also wants to borrow 10.5 million Bitcoins.Both person A and Person B promise to pay the lender 10% interest, yet there is only every going to exist 21 million bitcoins.

However person A and person B have made a promise to pay back a total of 23.2 million bitcoins..... one of them is not going to have a good time!Ultimately the bank is not going to receive all the interest they were relying upon and will eventually need bailing out by our governments, so they can continue to trade and pay their staff high wages..... Of course there is more people than just person A and person B and they will never be able to borrow half of the economy on their own.There is also more than 1 bank that will be lending.However on paper the calculations are the same, but as more people and more banks are thrown into the equation the time scales increase to cover many years, yet the inevitable will still happen as no matter how much good intention there is to repay the loans the fact is there is more owed than exists.This is just the same with Fiat, although more money can be printed to cover this short fall, but that only serves to decrease the value of the money in our pockets unless our country can manage to take money from another country.

BUT again the inevitable will happen and a country will soon no longer be able to afford to pay its own debts so it now having to borrow to cover its short falls... and eventually they will not be able to reply the loan that they have taken from your/our country.No matter how you work out the calculations the inevitable will always == FUCKED!The best result possible is to postpone the inevitable for a few more years or past our generation... I think Bitcoin could well be the answer to our broken financial systems, but if all bitcoin tries to do is imitate an already broken system, it will make it no different from the dollar or pound, as 110% of it will be controlled by large institutions.loans and interest are NOT a good thing and while banks say they offer us these loans owing to them being good people and wanting to help "the small people" they are in fact doing it to help themselves only, and intend to postpone the inevitable past the point of their pay day!"The Monkey may very well have got it right with bitcoin, dont break it now!"